IAB says 2Q Web ads hit $2.1 bln

Numbers don't jibe with Competitive Media Research

By

WilliamSpain

NEW YORK (CBS.MW) -- Move over Carl Sagan; the billions and billions have finally come to the Web.

Or have they?

According to a report issued Tuesday by the Internet Advertising Bureau, online advertising revenue hit $2.1 billion for the second quarter of 2000 -- up 8.8 percent from the first quarter and a whopping 127.3 percent increase over the same period in 1999.

In a press release, IAB chairman and venture capitalist Rich LeFurgy hailed the figure as an indicator "of the continued health of the Internet as it evolves into history's most robust medium for advertisers and marketers."

The Internet ad revenue report, conducted by PricewaterhouseCoopers, also claimed that the much-maligned banner ads were good for 50 percent of that figure. Sponsorships came in second at 27 percent, with the classifieds, referrals, interstitials, e-mail, rich media and keyword searches bringing up the rear.

The report would put Web ad revenue at an $8 billion run rate for 2000, up from 1999's total of $4.6 billion.

However, last year's figure is in sharp contrast to at least one other report. Competitive Media Research puts 1999 Internet advertising spending at just over $1.9 billion -- less than half IAB's number.

"IAB seems to have pretty reliable method," said online ad analyst Rich Petersen of CS First Boston in San Francisco. "But that is enough of a disconnect that it should raise some eyebrows."

Since IAB relies on information from ad sellers and CMR from buyers, "The real figure is probably somewhere in between," Petersen said. "But I don't know who is closer."

Making sense of IAB's numbers "depends on how you define ad revenues," pointed out Jeff Minsky, director of media convergence for OgilvyOne, the online media arm of ad agency Ogilvy & Mather. "If you [include] all the AOL and Yahoo multi-year sponsorship deals, that could be right. If you are just talking about general media planning, that seems a little high."

On the sharp difference between the two figures, "CMR is definitely an unbiased resource as opposed to the IAB, which is an industry group and tends to show some bias in a favorable direction," Minsky said.

To throw some more numbers into the mix, in August Jupiter Communications estimated total 1999 online advertising at $3.5 billion and predicted that would increase to $5.3 billion in 2000.

According to CMR and Robert J. Coen at McCann-Erickson Worldwide, total U.S. ad spending in 1999 was $215.3 billion

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